Failed, if you think it that way, then yes, Zalaph shouldn't have good loot. It is a valid point.
However, I don't find the rest of the dungeon THAT hard either... It can be soloed if someone is carefull and prepares appropriatelly, even on max spawn. The whole idea is though that you MUST kill Zalaph, you can't simply stroll by and steal everything he has.
(well, actually I had done it with an 11th level char but back when negative protection stopped ability drain. But I would never imagine that character soloing Zalaph!)